Senators Warren, Blumenthal, Duckworth, After Banks Collapse, Urge Banking Regulators to Strengthen Bank Capital Requirements, Secure Safety and Soundness of Banking System
Warn that as bankers create misleading narrative, “(y)ou must resist this industry spin and continue (the) long-overdue work to implement strong capital standards that keep our financial system safe”
Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Tammy Duckworth (D-Ill.) sent a letter to Michael Barr, Vice Chair for Supervision of the Federal Reserve, Martin Gruenberg, Chairman of the Federal Deposit Insurance Corporation, and Michael Hsu, Comptroller of the Currency, urging the banking regulators to establish strong bank capital requirements to protect consumers and preserve the safety and soundness of the banking system.
“In the immediate aftermath of Silicon Valley Bank (SVB’s) sudden failure, thousands of small businesses, nonprofits, and other customers were thrust into uncertainty, facing serious questions about whether they would be able to pay their employees, make payments, and stay afloat,” wrote the lawmakers. “While regulators have taken extraordinary action to stem the threat of contagion, the failures of SVB, Signature, and Silvergate, are deepening concerns about the resilience of the banking system.”
Banking executives and industry groups have long lobbied against strengthened capital requirements and, in 2018, they successfully rolled back Dodd-Frank regulations and loosened bank capital requirements. Just days before the collapse of SVB, Republican members of Congress pushed Fed Chair Powell to weaken capital requirements.
“The failures of SVB and Signature, and the regulatory and supervisory failures that enabled its costly collapse, are directly tied to the big banks’ and Republican policymakers’ cynical efforts to weaken our regulatory framework,” concluded the lawmakers. “In order to prevent future bank crises and protect working Americans, we urge your agencies to quickly implement strong capital requirements and resist industry pressure to weaken or delay these requirements.”
Senator Warren is a leading voice on the financial system, advocating for critical regulations to protect consumers, the financial system, and the economy:
- On March 29, 2023, Senators Warren and Catherine Cortez Masto (D-Nev.), both members of the Senate Banking, Housing, and Urban Affairs Committee, Josh Hawley (R-Mo.), and Mike Braun (R-Ind.) introduced the Failed Bank Executives Clawback Act – bipartisan legislation that would require that, in the event of a bank failure, federal regulators claw back all or part of the compensation received by bank executives in the five-year period preceding the failure.
- On March 22, 2023, Senator Warren and Rick Scott (R-Fla.) introduced bipartisan legislation to require a presidentially-appointed and Senate-confirmed Inspector General to the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection.
- On March 22, 2023, Senators Warren, Tammy Duckworth (D-Ill.), Richard Blumenthal (D-Conn.), Bernie Sanders (I-Vt.), Jack Reed (D-R.I.), Mazie Hirono (D-Hawaii), Ed Markey (D-Mass.), Angus King (I-Maine), Sheldon Whitehouse (D-R.I.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), and Brian Schatz (D-Hawaii) sent a letter to the Vice Chair for Supervision of the Federal Reserve Michael Barr, calling on him to exercise the Fed’s authority to apply stronger regulation and supervision to banks with assets totaling $100 to $250 billion.
- On March 19, 2023, Senator Warren sent a letter to the Inspectors General at the Department of Treasury, the Federal Deposit Insurance Corporation, and the Fed, urging them to immediately open a thorough, independent investigation of the causes of the bank management and regulatory and supervisory problems that resulted in this month’s failure of Silicon Valley Bank and Signature Bank and deliver preliminary results to Congress and the public within 30 days.
- On March 14, 2023, Senator Warren and Representative Katie Porter (D-Calif.) led dozens of Democratic lawmakers to introduce the Secure Viable Banking Act, legislation that would repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 following the collapse of SVB and Signature Bank. In 2018, Senator Warren was outspoken about the dangers of passing the Economic Growth, Regulatory Relief, and Consumer Protection Act, which reduced critical oversight and capital requirements for large banks.
- On March 14, 2023, Senator Warren sent a letter to ex-SVB CEO Greg Becker, asking for answers about his and SVB lobbyists’ efforts to roll back Dodd-Frank rules prior to the collapse of the bank.
- On March 14, 2023, Senator Warren called on Federal Reserve Chair Jay Powell to recuse himself from the Federal Reserve’s announced internal review of its supervision and regulation of SVB.
- On March 13, 2023, Senator Warren published an op-ed in the New York Times calling Congress and federal regulators to strengthen weakened rules to avoid another crisis, intensify bank oversight, reform deposit insurance, and hold SVB executives accountable for any malfeasance or mismanagement that led to its failure.
- On March 10, 2023, Senator Warren released a statement following the collapse of SVB.
- On December 8, 2022, Senators Warren and Tina Smith (D-Minn.) sent letters to three key banking regulators to raise concerns about the ties between the banking industry and crypto firms.
- On December 6, 2022, Senators Warren, Marshall, and John Kennedy (R-La.) wrote to Silvergate, the bank that reportedly facilitated the transfer of FTX customer funds to Alameda Research, seeking answers about the bank’s role in the loss of billions of dollars in customer funds.
- In January 2022, Senators Warren and Reed (D-R.I.) sent a letter to Dino Falaschetti – the Trump-appointed Director of the Office of Financial Research (OFR) in the U.S. Department of the Treasury – urging the OFR to use its critical tools to collect data to safeguard the financial system from stability risks.
- In January 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
- In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins.
- In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system.
- In May 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Randal K. Quarles, Vice Chairman for Supervision at the Board of Governors of the Federal Reserve System, about his decision to weaken supervision for large foreign banks including Credit Suisse, which suffered the largest losses from the implosion of the hedge fund Archegos.
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